U.S. News and World Report recently sat down with the colorful and popular investor Kevin Paffrath, better known as "Meet Kevin" after his YouTube handle. At 29, he's already strung together an impressive list of accomplishments: He's a multimillionaire investor in real estate, stocks and alternative assets like cryptocurrency. His YouTube channel has more than more than 1.7 million subscribers. He garnered more than 650,000 votes in California's 2021 gubernatorial recall election. And he has a wife and two children.
Known best on the internet by the name Meet Kevin, the handle on his YouTube account, Paffrath has put out thousands of videos at a dizzying pace, often publishing three to six pieces each day.
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In his videos, he covers everything from real estate to the best cryptocurrencies, his favorite stocks and his future political plans.
Here are some topics Paffrath and I covered in our recent conversation:
-- Cryptocurrency.
-- Zillow and house flipping.
-- Favorite stocks.
-- Risk.
The following is an edited transcript of the conversation.
Cryptocurrency
U.S. News: When did you get into crypto as an investor? What are some of your favorite cryptocurrencies right now?
Kevin Paffrath: Probably more heavily interested in crypto starting around the end of last year.
I started with Bitcoin. I feel like Bitcoin is that great big gateway drug for everybody to get into crypto, which is wonderful. I encouraged everybody to do it. Get in. Put $100 in, whatever. Get started. Because then you start paying attention to the news related to Bitcoin, then you're interested in Ethereum, put $100 in over there, and then you get introduced to this whole new world of Ethereum, or Cardano -- those are my top three right now.
USN: Is there a risk to Ethereum if its "gas fees" don't come down sometime soon?
KP: No, I don't (think so). I think Ethereum will be here to stay. I do think that developers will sort of niche down into what works best for their particular applications.
I think there will be plenty of DeFi (decentralized finance) apps that come up on various different (blockchains). ... The major ones will have a utility. A lot of them will disappear. That'll be a big danger: I think a lot of, probably the (outside the top 20) coins, I expect almost all of them potentially being at risk for vanishing at some point. So I would really discount risk there heavily.
[See: What's the Best Cryptocurrency to Buy Now? 7 Contenders.]
Zillow and House Flipping
USN: Zillow Group Inc. (ticker: Z, ZG) recently paused their home-buying program, which was not profitable. Do you think the iBuying model is a good one? Can this model be automated and scaled? They don't do much to the houses.
KP: Not well. Real estate is a very ugly business that relies on working with and finding high-quality contractors, which is extremely difficult.
You're talking generally about trying to find handyfolk to do things ... so there's not enough profit for contractors. The good ones are doing big projects. ... In my opinion, profits are terribly low in house flipping. ... I think Zillow realizes they got way overextended -- there are not enough workers. Fed starts raising rates next year? It's going to look ugly, because you're right, they're losing money hand over fist.
Favorite Stocks
USN: What are some of your favorite stocks right now? I know you're a big Tesla Inc. (TSLA) guy.
KP: Yeah, I mean definitely Tesla has been big.
Big fan of Enphase Energy Inc. ( ENPH) right now, huge, one of my favorites, big solar inverter play. High quality, high margins.
I like Etsy Inc. ( ETSY). I think Etsy is the perfect supply-shortage stock where people are going to use Etsy potentially for gifts for Christmas instead of maybe the traditional things that might be harder to get.
Lemonade Inc. ( LMND) is kind of like a long play: You've got to be careful on this one because it just loses money hand over fist. It's a low-margin business, but they've got some potential in the "insurtech" space.
Of course, Alphabet Inc. ( GOOG, GOOGL), Apple Inc. ( AAPL) -- these are wonderful companies, as well.
Risk
USN: You seem to have a very high risk tolerance. Do you think about when the tide goes out, who's the one to be caught swimming naked? Do you hedge? Do you secretly have a huge bond portfolio or own dividend stocks?
KP: I don't do bonds. I don't do dividend investing. Because I'll get taxed way too much on dividend investing -- if I want to try to get taxed, I'll play options because then I know I'm going to get a short-term trade, I'm going get taxed for that, and that's fine. I'll take that loss for that gain, and I'll pay the taxes on it.
For my long-run portfolio, I like to be at zero margin, so no debt on stocks, and long positions. So whether that's Tesla, Enphase, Etsy, Amazon.com Inc. ( AMZN), Apple -- which we talked about -- Square Inc. ( SQ) or some other stocks, these are positions I like to be long on and I don't want to sell them. I just want to buy them, hold them and keep them.
I just went into margin because I had a bigger tax bill than I expected, so now I've got to work on paying that off. But otherwise, real estate's leveraged about 50% and stocks about 15% right now, and I've got to get that back down to zero.
